<p>Dend, didn't mean to hijack the thread, I thought you got the answer. Don't you think if it were as easy as saying it's the non custodial parent's money we would all do it? Do you think any of our parents want to use their home equity for college bills? But MANY people do and those who don't want to go to less expensive schools.</p>
<p>schools that use the
PROFILE will expect you to tap assets as well as want to see records from other parent</p>
<p>yes, i sent in all the information</p>
<p>so college expects the OP's parents to sell the house? house they bought by working all their lives... I'm in a similar situation. I just can't believe this...</p>
<p>"so college expects the OP's parents to sell the house?"</p>
<p>No just tap the equity to pay for college.</p>
<p>^I dont necessarily think that the half a mil in "real estate" that the OP is referring is his parents house...but I'm not sure, but the white lion beat me to it, yes the college FA office would expect the parents to have the ability to tap into the equity of this $500,000 asset.</p>
<p>If you had a $500,000 house, but your income was only $20,000, I expect the adcom would also be curious how you were able to live. How you paid house taxes- ins, food costs, transportation etc.</p>
<p>But yes I think many of us speak from experience when we say that the college will expect you to take out a loan against your home equity.
even if you can't afford, or find it difficult to afford the payments.</p>
<p>As far as they are concerned, it is an available asset that can be tapped, you don't have to sell it, but you can borrow against it.</p>
<p>Real estate other than the primary residence is treated exactly the same way as money in the bank, stock, or any other asset. It needs to be used either through equity lines or sale to pay for college. Why should someone who has $500,000 worth of real estate that they worked all their lives for be treated differently than someone who has $500,000 worth of stock that they worked all their lives for?</p>
<p>If all the equity is in the primary residence, there would be no contribution from assets under the Federal Methodology. Even under the Consensus Approach, used by most elite colleges and universities such as Amherst and Chicago, there would be no contribution in this instance as the home equity would be capped at 2.4X income or $48,000, which is less than the asset protection allowance. </p>
<p>If the equity is not in the primary residence, the maximum contribution rate would be no more than 5.6% annually of the net equity (value of house less any mortgages) under the Federal Methodology and 3 to 5% under the Institutional or Consensus Approach. Furthermore, if the AGI (adjusted gross income) is less than $50,000, there is no expectation of contribution from assets of any kind under the FM. Even under the IM, I don't believe there is any expectation of contribution from assets with an income as low as $20,000 as the owners of the property would not qualify for a home equity line and the assets are essentially untappable. </p>
<p>Most likely the EFC will be 0.</p>
<p>* am an undergrad at univeristy of chicago, admitted transfer to amherst, who didn't apply for finaid last year, but applied this year and waiting to hear from schools.*</p>
<p>Transfer students often dont get great aid
Dont know specifically about Amherst
[quote]
The College expects that your parents will assist to the greatest extent their income and assets will permit and that you will share in the cost of your education through working, borrowing, and saving. The College encourages you to seek aid from community, regional, and national organizations. All eligible students are expected to apply for a Federal Pell Grant by completing the FAFSA. Similarly, students are expected to apply for state scholarships or grants that may be used at Amherst.</p>
<p>A part of your family's contribution toward your student expense budget is your responsibility. The College expects you to contribute from your income (including earnings from summer employment), your past savings, and any other resources that are available to you. The expected amount of student income contribution is adjusted from year to year according to prevailing wage rates. In addition, 35 percent of your past savings and other assets is expected to be available to help defray your expenses.</p>
<p>Except in unusual situations, the College will not award financial aid to you without taking into consideration your parents' financial circumstances. In the case of divorced or separated parents, each parent is expected to provide financial information.
[/quote]
</p>
<p>But UChicago is fairly expensive, how did you go from not needing aid to $20,000 annual income?</p>
<p>If one lives in an area that has seen huge real estate appreciation, it is not uncommon to see houses that were $175K ten years ago now going for $500K. Real estate taxes vary by location. I know lots of people who can't afford to move because downsizing to a smaller house would cost more than staying put.</p>
<p>OK, Thank you very much for your answers:</p>
<p>cellardweller:</p>
<p>Great information. My fafsa efc is 0, but that's without the noncustodial parent's information. When they are evaluating the assets, do they expect the non-custodial parent to pay the same 3-5 percent? what is the difference between IM and FM? </p>
<p>emeraldkity4:,
I took out a 30k loan to pay for school
Overall, I meant that that 500k is in realestate that is not our residence. My parents brought moeny from another country and invested in Real estate. They make a living mostly by leasing out property, but the agi is still fairy low, as I said before. Furthermore, all the property is in my-noncustodial parent's name.</p>
<p>The assets are tappable, but we owe way more on the houses that we actually have..., and technically, if we took out say, 5 percent a year, a.k.a 200k, our aig would be in the negative</p>
<p>Custodial parent vs. non custodial parent does not make a difference. If the real estate is not the primary residence of either parent it is consider an asset and is counted. Your guidance counselor may not be the best source for information. Read some of the other posts in this thread. It has been explained many times..do a search for home equity or real estate in this thread.</p>
<p>ebeeee,</p>
<p>I have carefully read every single post in this thread, and I know what has and what has not been explained. I was appreciative of information given, and I have not asked any questions in my last post that were answered before.</p>
<p>The difference between FM and IM for your purposes is that in FM (Federal methodology), the non-custodial parent's assets are not included. In the IM (institutional methodology), the non-custodial parent's assets are included. However, the IM does not consider the actual value of the properties as the asset, but rather the equity your parent owns. So if the value of the properties are $500,000 but there is a $250,000 mortgage, the equity available to pay for college is $250,000. And yes, colleges expect non-custodial parents to help pay for college, generally with the same 5%, regardless of whether they are required to do so by law or by divorce agreement.</p>
<p>You are getting some great information -- and some of the information you provided in the beginning is slightly different in actuality.</p>
<p>Chedva is correct -- the equity in the property is what is considered an asset, not the value of the property -- so that is going to make a huge difference. The property is only in one parent's name -- that will make a difference. You haven't mentioned your Father's income (you said your Mother's was 20K) and that may make a difference. Plus -- you parents may have other assets your haven't mentioned.</p>
<p>I think it is going to come down to a situation that we, on an online forum, really can't help you with. The bottom line is that you and your parents (both of them) will be expected to contribute to your education. You will be offered loans and work/study, if you mom truly has no assets in her name and has an income of 20K will not be expected to pay anything and your father will be expected to pay -- how much, you won't know until you get the FA package.</p>
<p>How long before Amherst lets you know?</p>
<p>Hsmomstef, Chedva,</p>
<p>500k is the equity..., there is over 1 mil in value of assets.
My father's income is even less - about 12k a year, all coming from the renting out property (adjusted) They have no other assets or porperty</p>
<p>Amherst promisted to let me know by mid-may, but that's not quaranteed...</p>
<p>How will it make a difference that all the assets are in the name of only one parent?</p>
<p>Sorry. I meant other posts in this forum, not this thread. My mistake. There are lots of other posts in this forum about this issue.
Unfortunately, it will not make any difference that all the assets are in the name of only one parent.</p>
<p>I know that if total income of parents is less than $50,000 then there is no expected contribution from assets under the FM approach. I believe it is still true under the IM. </p>
<p>The reasoning is based on the fact that with a very low income (12K) the parent has no ability to tap the asset for a home equity loan. They would have to sell the asset outright which cannot be a condition for financial aid. </p>
<p>Please make sure to check the AGI of both parents in the tax forms so as to include all sources of income. You can place a call to Amherst finaid office and find out at what level of AGI they will start requiring a contribution from assets.</p>